What surprises me is how little discussion there is about the impact and potential opportunity this creates for Google!

Acquisitions are hard – even the small ones. I've had a lot of experience with M&A over the years and I'm left with several observations:

Only 1 in 3 acquisitions work out and give you the results anticipated when you made the acquisition offer.

The bigger the acquisition, the harder it becomes (and it's not a linear function of size – it gets exponentially harder).

Strategy and culture synergies are critical. Without them, merging two companies is like mixing oil and water.

M&A distracts the management teams of both companies. The bigger the merger, the more the distraction.

Merging Microsoft and Yahoo will be a very difficult process and will totally consume the senior management attention of both companies.

What an opportunity this creates for Google! Think of it – your two major competitors are suddenly consumed with each other. Their management teams are focused inward on making the merger successful and have to contend with what to keep and what to let go. All you have to do is focus on winning in the market! Just what you were doing before but now your two major competitors are sitting on the sidelines trying to get their act together.

I saw the impact that this can have when I was at Cisco; Wellfleet and Synoptics announced their merger to create Bay Networks. That merger gave Cisco a golden opportunity to go out and win in the market while our two competitors were distracted. With John Chambers' guidance, we did just that.

Will we look back in a couple of years and say that this merger helped Microsoft win or that it helped Google rise to an even more dominant position in the market?

Time will tell.

While the merger reduces the number of potential acquirers by one and so might impact M&A valuations, it could spur an acquisition fest by Google and other companies impacted by the MSFT/YHOO merger.

It's a lot easier to go out and acquire a large number of smaller companies than it is to merge with one big giant. Google has an opportunity to go and cherry pick the smaller (but growing) startups while the two elephants dance.